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Nursing Homes Bill for More Therapy Than Patients Need, U.S. Says

WASHINGTON — Nursing homes receive far more in Medicare payments than it costs them to provide care, exploiting the billing system in some cases by giving patients more therapy services than they need, federal investigators said in a new report.

The report, to be issued on Wednesday by the inspector general of the Department of Health and Human Services, said that nursing homes regularly filed claims for the highest, most expensive level of therapy, regardless of what patients required.

In recent years, said the inspector general, Daniel R. Levinson, nursing homes have been classifying more and more patients as needing the highest level of therapy and providing exactly the amount required to qualify for high payments.

“Skilled nursing facilities must provide therapy for 720 minutes or more during a seven-day assessment period to bill for ultrahigh therapy,” and they “increasingly provided exactly 720 minutes,” Mr. Levinson said.

The inspector general cited claims data as evidence that some nursing homes had exploited the system “to optimize revenues.” For example, Mr. Levinson said, a Medicare beneficiary who received hospice care before and after her nursing home stay received physical therapy five days a week for five weeks, “even though her medical records indicated that she asked that the therapy be discontinued.” He said the extra billings cost Medicare $1.1 billion in 2012-13.

Medicare classifies nursing home residents into one of 66 groups depending on the patient’s needs. More than one-third of the groups are for patients who require physical, occupational or speech therapy. Medicare pays more for patients who require the most therapy.

The acting administrator of the Centers for Medicare and Medicaid Services, Andrew M. Slavitt, did not dispute the findings. He said the current payment system created an incentive for nursing homes to “provide as much therapy to a resident as that resident can tolerate.”

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Daniel R. Levinson, inspector general of the Department of Health and Human Services, spoke in Washington in June about a national effort to crack down on Medicare fraud.Credit
T.J. Kirkpatrick/Getty Images

The inspector general said that Sylvia Mathews Burwell, the secretary of health and human services, should consider reducing Medicare payment rates for therapy in nursing homes. Mr. Slavitt agreed, but said Congress would need to provide the agency with “additional statutory authority.”

In any event, Mr. Slavitt said, Medicare will step up efforts to prevent fraud and detect “suspicious billing behavior” by nursing homes.

Federal investigators welcomed that commitment. But it may take some time for Medicare officials to act on the recommendations. The inspector general has documented “inappropriate payments” to nursing homes in many studies over the last 15 years.

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In March, an influential federal panel, the Medicare Payment Advisory Commission, said that Congress should thoroughly revamp payments to nursing homes. Medicare payments to nursing homes, it said, have been at least 10 percent higher than the cost of care for 14 years in a row.

“Therapy payments are not proportional to costs, but instead rise faster than providers’ therapy costs,” the commission said, and Medicare “essentially requires taxpayers to continue to finance the high margins of this industry.”

But the inspector general said this would not solve the problem because the “bundled payments” proposed by Ms. Burwell would be based in part on current payments to nursing homes treating Medicare beneficiaries.

The American Health Care Association, a trade group that lobbies for nursing homes, has said it recognizes concern about the use of therapy and supports efforts to shift Medicare “away from paying providers based solely on their volume of services.”

The industry says Medicare should pay a lump sum for a patient’s entire nursing home stay, based on the person’s condition and needs. Medicare now pays for each day of care, rather than setting a payment for the entire stay, and payments are partly based on the minutes of therapy provided.

Greg Crist, a spokesman for the American Health Care Association, said that while Medicare may pay nursing homes more than their costs, Medicaid, the program for low-income people, generally pays them much less than their costs. “And on any day,” Mr. Crist said, “two-thirds of our residents are on Medicaid.”

A version of this article appears in print on September 30, 2015, on Page A14 of the New York edition with the headline: Nursing Homes Bill for More Therapy Than Patients Need, U.S. Says . Order Reprints|Today's Paper|Subscribe